Budget Planning Budget Sub Meet and Confer

Rick Straka

October 10, 2006

Presentation Outline

FY2008-FY2009 Biennium• Dept of Finance Planning• Dept of Finance Slides• Planning Environment

FY2007 Budget Update

Budget Process Discussions

FY2008-FY2009 Biennium

Dept of Finance Guidelines• Inflation Estimate – 3% - 3 ½%

Tuition Plans by Governor Candidates• Pawlenty – Top 25% Free, Inflation Adj.• Hatch – Freeze or Reduce Tuition Levels

MnSCU Board Leadership Change

FY2008-FY2009 Biennium

Selected Slides from Dept of Finance Budget Presentation Follow

K-12 Education and Human Services are Nearly 70 % of General Fund Spending

K-12 Education and Human Services are Nearly 70 % of General Fund Spending

Debt Svc & Other3%

K-12 Education42%

Property Tax Aids/Credits10%

Higher Education9%

Health & Human Services26%

Environment, Agric & Econ. Dev 2%

Transportation1%

Public Safety5%

State Government2%

2006-07 Spending $31.6 Billion

-5

-3

-1

1

3

5

4 years ago 2 years ago now

$ in Billions

The Budget Outlook for the Next Biennium The Budget Outlook for the Next Biennium is Best Since 2000is Best Since 2000

The Budget Outlook for the Next Biennium The Budget Outlook for the Next Biennium is Best Since 2000is Best Since 2000

Projections for FY 2008-09 Are The Starting Point For Budget Planning

Projections for FY 2008-09 Are The Starting Point For Budget Planning

FY06-07 FY08-09

Beginning Balance $1,393 $1,113

Revenues 31,332 33,220

Spending* 31,612 32,593

Budget Reserve 653 653

Cash Flow Acct. 350 350

Tax Relief Account 110 0

Projected Balance $0 $ 737

*Spending does not include inflation*Spending does not include inflation

Outlook for FY 2008-09 Budget Planning

Jobs growth will continue at moderate levels through FY 2008

The economy and state revenues are predicted to grow at a fairly strong rate through FY 2007-09

Population and caseload trends will have the greatest affect on the budget for health care and K-12 education

Cost pressures will contribute to a gap between available resources and perceived needs

Constant Pressures…Estimates for FY 2008-09

General inflation on spending ($954M)

Transportation/MVST on 2006 ballot ($172M)

2% state salaries & benefits ($100M)

2% increase higher ed compensation ($100M)

2% increase in general ed formula ($290M)

2% for long-term care providers ($80M)

Budget Planning Environment

Biennial Budget Not Set Until May/June• Appropriation Estimates• Tuition Levels finalized in May/June

Bargaining Agreements • Historically Settled During Next Biennium

Enrollment Levels• RCFN - Effect of Policy Implementation• Demographics

Tuition Rates• Political Factors Will Limit Tuition Increase

FY2007 Budget Update

Currently a Balanced Base Budget

Estimated Reserve Just Below 5%• MnSCU Required Reserve is 5%-7%

RCFN Policy Effects Better Known in Nov.

Final Enrollment Levels• NEF, Transfer, Intl, Grad

Budget Planning Budget Sub Meet and Confer

Rick Straka

October 10, 2006